The donor-reliant funding model has “reached its limits”, a new report warns, urging civil society groups to diversify their income streams.

The latest State of Civil Society report says currently relied-upon funding sources are “increasingly unreliable, politically constrained or inadequate for today’s needs”. 

The 14th annual flagship report was published by Civicus, a global alliance of civil society organisations and activists with more than 17,000 members in 175 countries working to strengthen citizen action.

Its members include Amnesty International, Oxfam International, Greenpeace, Plan International and Save the Children International.

The report, which draws on hundreds of interviews from more than 120 countries, looks at civil society’s role in key areas including world conflicts, democracy, the economy, the climate, technology, gender rights, migrants’ rights and multilateralism.

As the world faces “intersecting and accelerating crises”, including growing threats to democracy amid a rise of right-wing-populism, civil society must seek to develop “more diverse and sustainable funding models”, the report urges.

The report warns that civil society is experiencing an “accelerating funding crisis”, saying: “In recent years, major funding sources such as state donor agencies have been cut back and become more aligned with narrowly defined national interests, particularly defence, diplomatic and trade agendas.

“This has made it harder for civil society organisations to secure support for core work and raised the risk of being instrumentalised around agendas that aren’t theirs.”

The report points towards President Donald Trump’s freeze to USAID, which it says has “rocked” civil society, adding that many civil society groups now face an “existential threat”.

It says: “If the cuts become permanent, the result will be a diminished civil society far less able to defend rights and hold the powerful to account.”

The report argues that the donor-reliant funding model has “reached its limits”, saying: “The funding sources civil society groups have long relied on are increasingly unreliable, politically constrained or inadequate for today’s needs.”

It says that whether from bilateral and multilateral funders or private philanthropy, funding “often reproduces economic and political power imbalances and can lead to a project-driven civil society unable to confront power”.

The report proposes that civil society should explore community-based funding approaches such as membership models, crowdfunding and community foundations, developing the ethical enterprise and investment activities that align with civil society missions while generating unrestricted income and leveraging non-financial resources through skilled volunteerism, time banking and resource sharing.

“Out of necessity, many civil society groups, particularly in the global south, are already pioneering these approaches, distributing financial risk, increasing independence and making themselves accountable to the communities they serve rather than external funders. Civil society as a whole can learn from these examples,” the report says.

Civil society organisations must “move on from survival strategies”, the report says, and should instead “reimagine civil society for an age of multiple, intersecting and accelerating crises”. 

The report adds: “A more movement-oriented, community-driven, narrative-focused, resistance-ready, networked, principled and financially independent civil society can better withstand current threats and more effectively realise its collective mission of building a more just, equal, democratic and sustainable world.”